The CEOs of the UK’s top energy companies have urged the government to take action to avert a fuel poverty disaster next winter.
While pre-payment customers were already feeling the consequences of increased bills, the chief executives told MPs probing energy costs that they anticipated the number of people in financial trouble to rise as time went on, ahead of another predicted hike in the energy price ceiling in October.
Speaking to the The Business, Energy and Industrial Strategy (BEIS), chief executive Keith Anderson made a call for the price cap system to be totally scrapped.
The price cap was recently raised by a record £693 on average annually for households in April, with pre-payment customers, who tend to be among the most vulnerable, facing an even larger increase.
“I think the problem’s got to a size and scale where it requires something significant of that nature where, for those people who are deemed to be in poverty…, that puts their bill back to where it used to be before the gas crisis” Keith stated.
Keith is not the only head at a major supplier speaking out and urging the Government to take action, with Chris O’Shea, the boss of British Gas-owner Centrica claiming the company had seen a rise of 125,000 households in debt over the past 12 months, meaning that 715,000 people owed money to British Gas with no doubt of that number rising.
Another key player, Mike Lewis who is the Chief Executive Officer of EON also raised his concerns. He is steadfast that the Council Tax rebate and energy loan already announced are not nearly enough support for households, and put forth the idea of removing VAT and green levies from energy bills in the short term.
Other organisations, such as the Association for Decentralised Energy (ADE) have also said that the price cap is not the way forward to navigate through the energy crisis.
Their CEO, Lily Frencham has put emphasis on Net Zero being the way forward, and called for the deployment of energy efficiency tools. Stating: “The best way to protect customers and to offer them a positive experience, in the long term will be through moving more quickly towards the net zero future we need.”
“We need to accelerate deployment of measures we know work – such as energy efficiency, low carbon heat delivered through green heat networks and using flex to ensure we got the most out of the system – to insulate customers, bringing lower costs and higher comfort to people around the UK.”
Sadly, the energy crisis sees no signs of stopping anytime soon. The most recent estimates are bleak, implying that the energy price cap would rise even higher at the next update in October.
Cornwall Insight, an investment business, predicted that it will rise by another £629 this winter, hitting £2,600 per year on average for clients on ordinary default contracts.
Previously, the business correctly forecasted the April cap rise. If its most recent forecast is correct, the price cap will have more than quadrupled in a year.
The decision to raise the price cap was mainly influenced by a jump in natural gas prices, which had risen to around four times their previous cost prior to the price cap hike.
This all began as there was increased demand for gas from China and Asia, as well as a harsh winter in Europe in 2020/2021, which required the use of stored gas reserves. Then, as the COVID-19 pandemic grew, and conflict between Russia & Ukraine.
Energy Firms to be Investigated after huge Direct Debit Bills to Customers
Energy companies will face investigation in connection with an increase in millions of consumers’ direct debits.
Ofgem, the market regulator, stated that there had been “troubling evidence” that families are being overcharged to fund a price cap increase. This comes as the price cap suppliers could charge for energy increased 54% in April, however there is evidence that some suppliers have more than doubled their monthly direct debit payments.
Some companies appear to be encouraging concerned clients to sign up for long-term rip-off tariffs, trapping them in paying absurd fees for longer than necessary, rather than offering them a scheme that would benefit them and help preserve costs.
The industry regulator, Ofgem, has informed energy retailers that it intends to confront the unethical behaviour and is threatening multimillion-dollar fines.
Chief Executive at Ofgem, Jonathan Bearley said: ‘Concerns have been raised that some suppliers may have been increasing direct debit payments by more than is necessary or directing customers to tariffs that may not be in their best interest.
‘We have also seen troubling stories about the way some vulnerable customers are being treated when they fall into difficulties.’
A series of investigations and reviews have been launched by Ofgem, backed up with warnings of financial penalties.
Mr Bearly added: ‘This will include stricter supervision of how direct debits are handled, how much they are holding in customer credit balances and ensuring companies are held to higher standards for overall performance on customer service and protecting vulnerable customers.’
This comes after it was revealed in February that the big six major suppliers in the UK had made more than £1bn profits in the year ending 2022. British Gas for example’s profits had risen over 44%, netting the company £948m, almost double. This of course caused a wave of criticism across social media, leaving a sour taste in people’s mouth as the UK faces the worst energy & cost of living crisis in 22 years.
How Brits are Re-arranging their Energy Habits
A new survey from Smart Energy GB has revealed how the energy crisis is affecting the way homeowners consume their energy.
A study of 5,000 individuals found that 73% made adjustments at home to decrease expenditure and counterbalance the price cap increase before it went into effect on April 1.
Common strategies include simply filling the kettle with only what is needed there and then (50 percent), enhancing house insulation (37%), and turning off the TV at the plug when not in use (34 percent).
And nearly half (48 percent) have a smart metre to receive precise bills rather than estimates and to monitor energy usage in near-real time.
Only about a third of Britons have said they don’t know enough about energy usage — with only a third (32%) feeling well informed.
As a result, nearly half of those questioned (46%) want more assistance in dealing with rising expenditures.
During this time of need, one in ten people have turned to helplines such as Citizen’s Advice, while 7% have used bank loans for financial assistance.
Brits have also taken cuts to account for increased living costs, such as avoiding buying new clothing (30%), decreasing the number of takeout drink purchases (26%), or shopping at a cheaper supermarket (24 percent).
The energy crisis shows no signs of slowing down, as Cornwall Insight, an investment business, predicted that the price cap will see another £629 rise this winter, hitting £2,600 per year on average for clients on ordinary default contracts.
Here are some ways to start saving on your Electricity Bills:
- Don’t heat empty rooms: If you have a spare room that you don’t use much or a storage room that is rarely used, turn off the heat to save money.
- Check your insulation and draught proofing: One of the most effective methods to reduce energy usage is to lessen the demand for heating in the first place by ensuring insulation is in good condition and draughts that take heat away are minimized.
- Avoid standby mode: Unless switched off at the wall, appliances like your TV continue to use energy, costing the average UK home £35 per year.
- Switch to LED Bulbs: Traditional incandescent bulbs are incredibly inefficient. Modern LEDs are the polar opposite, and they also last longer, making them less wasteful.